21st Century Investing Strategies From Dmitry Balyasny

Barry speaks with Dmitry Balyasny, managing partner and chief investment officer at Balyasny Asset Management (BAM), a firm he co-founded in 2001. They discuss his career path, his thoughts on the current market environment for trading, hedge funds and more. 

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is Masters in
Business with Barry Ritholtz on Bloomberg Radio on.

Speaker 2 (00:16):
The latest Masters in Business podcasts. Strap Yourself in another
great one. Dmitri Ballyasni. He's co founder of the hedge
fund bally Asny Asset Management. They're a twenty eight billion
dollar multistrat firm, one hundred and seventy portfolio teams, twenty
three hundred people working in their offices around the world.

(00:39):
Started as a trader at Schoenfeld, grew into both a
manager and just a person looking at the world and
identifying inefficiencies and coming up with ways to capitalize in it.
Fascinating conversation. Not only are they one of the most
successful multistrats, but they have a one unusual business manager.

(01:02):
They have lots of partners who are employees, traders, business people,
fund managers. Really just a fascinating approach to corporate culture,
to creating the right set of incentives and creating a
high functioning meritocracy. Very few people have seen the world
of hedge funds develop from a trading perspective the way

(01:25):
Dmitri has I thought. The conversation was absolutely spectacular. And
I think you will also with no further ado my
discussion with Dimitri bally Asny. Thanks for having me very much,
and we got to say hello to Mike on the
way in. We'll talk about that a little later. I'm
fascinated by your background. You immigrated from the Ukraine at

(01:49):
age seven. How did that affect your perspective in terms
of taking risk and just looking at the world.

Speaker 3 (01:57):
I think it was probably very formative in building a
thick skin. Right. So back in Kiev, we're living in
communist Soviet Union, parents would stand in line to buy
jog of milk for a couple hours. I'd never been

(02:21):
in a car until I was in the US, never
taken a flight until we immigrated, so a very different life.
There a lot of discrimination from a religious perspective and
ethnic perspective, being Jewish in Kiev at the time and
then coming here didn't speak the language. Different type of

(02:43):
discrimination for being Russian during the height of the Cold War,
although never really thought of ourselves as Russian. So it
builds a you know, I think it builds character and
builds a perseverance of a thick skin to be able
to deal with the difficulties and figure stuff up.

Speaker 2 (03:00):
You go to college at Loyola University in Chicago, where
you study business, what was the career plan?

Speaker 3 (03:09):
I wanted to invest, So I did a lot of
sales type jobs in high school because I figured out
that was the only way you could get paid because
you got commission as opposed to salary as a kid.
But I wanted to transition from selling stocks as a stockbroker,
which I was doing in college, to trading and taking

(03:30):
risk and investing. I wasn't sure how I was going
to do that in what format, but I was interested
in trading and investing from a young age. I read,
you know, market wizards, you know, followed the careers of
the top traders at the time, applied to every hedge
fund I could find, And I was lucky enough to
answer a newspaper out of all things when Showinfeld Securities

(03:50):
ran a newspaper aut in Chicago when they opened up
that office, and I was the one and only time
they actually ran a newspaper ad. So I was lucky
that I was following the one.

Speaker 2 (03:58):
I recall seeing, you know, traders wanted shore Field Securities.
They were down on Wall Street back in the mid nineties,
so you begin trading for Showenfeld in the mid nineteen nineties,
What was the trading environment, like, what were you doing
for them on the desk?

Speaker 3 (04:13):
Well, at the time, they were looking for people who
didn't have a lot of preconceived notions and kind of
systems and strategies that they really thought work, because they
wanted to start them from scratch and kind of teach
them their methodology, which was working well at the time.
And that fit me very well because I was making
a lot of money at the time in commissions as

(04:35):
a broker, but I was promptly losing a trading because
I didn't know what I was doing from a trading standpoint.

Speaker 2 (04:41):
You had to support your trading habit with commissions.

Speaker 3 (04:43):
Yeah, exactly, exactly, And so I would give people lots
of great advice and then proceed to go do the
opposite in my own trading. So I needed to go
somewhere to learn a method that had more structure and discipline.
And so they started you with a very small amount
of capital but and very tight risk limits in terms
of you know what you could trade, when you could trade,

(05:05):
you know what size you could trade, and from there,
once you showed some proficiency your risk box would expand.

Speaker 2 (05:13):
Meaning more capital, little little looser reins on what you
could do when how long you could hold things.

Speaker 3 (05:18):
That's right, And so I started with you know, very
short time periods, very small risk. Didn't make any money
for the first year, which was difficult because the salary
was zero, But after that I started kind of getting
the hang of it and making money pretty consistently.

Speaker 2 (05:33):
How did you work your way through the various roles
that Schoenfeld because eventually you end up allocating for their
internal funds.

Speaker 3 (05:40):
Right, Yeah, So it was almost completely flat management structure.
So at one point there were over one thousand people
on the trading side, and there was a handful of
people in senior management and you know, virtually no people
in middle management. It was very, very flat, and so

(06:00):
you were basically a trader. You could run a group
of traders, or you were just managing and not really trading.
And so I kind of worked my way up from
a pure trading position where after I was successful for
three or four years, I went to Steven and asked
him if I could start hiring people to trade some

(06:21):
of my risk, and he was kind enough to say, sure,
if you're willing to pay for them, you can hire them.
And that was good enough for me, and so I
did the same thing. I ran an ad in the
paper and I started hiring the initial traders, some of
whom are still with us today twenty five years later, wow.
And then I would allocate some of my risk to them,

(06:42):
and then as that became more successful, I hired more traders,
eventually analysts, eventually portfolio managers, and we spun off into
a division. And while I was doing that, Steve gave
me the opportunity to co invest in a portfolio of
hedge fund managers, external managers that we would allocate to,
and that was a great experience. I got to meet
a lot of the top headge fund guys at the time.

Speaker 2 (07:02):
So from building a whole division at Schoenfeld, what led
you to found Ballyosny Asset Management.

Speaker 3 (07:09):
It was always very entrepreneurial and so again it was
like a very flat firm, So I always felt like
I was building my own business. And our strategy started
to divert from the rest of the firm, like we
became more fundamental. We were holding things longer. We needed
to meet with company management, so we needed sell side
coverage and so that led to separate office space, separate strategies,

(07:31):
different types of pms and traders that we wanted to hire,
and eventually it led to needing to take an external
capital because it was a more higher capacity, you know,
type of strategy that demanded external capital. And so we
gradually moved from you know, an internal group to a division,
to a proprietary funded you know hedge fund, to a
traditional you know, externally funded hedge fund over a few years.

Speaker 2 (07:54):
So we'll talk a little later about some of the
technology that you guys have built internally, but mid nineties
had to be an incredible environment for trading, and it
seemed like every month it was a whole different set
of technology that came down the pike. Tell us about
your experiences in the nineties and are there any parallels

(08:15):
to what's going on today.

Speaker 3 (08:17):
Well, I think the world has moved, you know, tremendously
in terms of the trading technologies the people are using today.
When I think about at the time that I first
started as a broker, that's really going to date me.
But we had, you know, one monitor that would be
on a little carousel that you would spin around between
four different brokers, when you needed a quote, right, And

(08:40):
when I started trading at Choinfo, we had a person
whose job it was to be the printer reader, and
so you didn't get your fills electronically. You would get
your fills coming back on a printer and some poor
guys job was to read out your prints, you know,
so you would know where you got filled. So you know,
you contrast that with all the AI and data you
know technology today that we and others use for trading

(09:03):
and investing, and it's just, you know, tremendously different world
from the overall kind of technologies coming through the pike
the Internet, I would say, was you know, bigger change
in terms of going from you know, very little interaction
I would say with technology for most companies at the

(09:23):
time and really most individual people to you know, tremendously
kind of jumping in and trying to figure it out.
Although I think AI will likely be a larger, you know,
more substantive change over time. We're coming from a place
where everybody's already you know, immeshed in technology in so
many different ways, whether you're an individual with your your phone,

(09:44):
your computers, your laptops, or you know, your your metaglasses,
et cetera, or a company with you know, zillions of engineers.
So I think it'll be more profound over the long term.
But the change feels a little bit less than it
did at the time.

Speaker 2 (09:58):
I mean, there's no doubt the Internet would a sea change.
Being able to plug into the hive mind was huge.
Mobile was pretty big. But it sounds like you're saying
artificial intelligence has potential to be even a bigger change agent.

Speaker 3 (10:13):
Then yeah, I think so. I think over time. I
think in terms of actual usefulness over time and ability
to make you better and smarter and lots of different
tasks at work, at home, et cetera. Like I use
these apps you know, every day, and they're still very
new and rough, but you could see at the rate
of improvement if you projected out, then you think about

(10:36):
like where these are going to be in five, ten,
fifteen years. I think it'll be pretty transformative.

Speaker 2 (10:42):
One of the things that really separates Ballyas and the
Asset Management from many other large multi strat hedge funds
are the amount of technology that you develop internally. Tools, apps,
research databases tell a little bit. To discuss a little
bit about what's it like to constantly being on the

(11:04):
bleeding edge of technology.

Speaker 3 (11:05):
Sure, so this was a big evolution for us. I
would say over the last six seven eight years. First
fifteen plus years, we mostly used external technologies and we
had a pretty small internal tech team, and the idea
was basically, give people all the support that they needed,
all the supporting type of tools, but do as much

(11:28):
off the shelf as you can. And over time, as
we expanded different strategies and added you know, macro and
commodities and quant and these more technologically sophisticated strategies, we
really found that we needed to build a lot more
things internally. And so now today we have five hundred
plus people and technology and other one hundred plus people

(11:51):
and data teams and AI teams, and we build a
lot of really outstanding tools that not only support investing teams,
but really enable a lot of the investing functions, whether
it's trading, research, risk, even operational in some aspects. When
we have folks come over from other firms. A lot

(12:14):
of times there because we don't really advertise it that much,
a lot of times people are kind of blown away
by some of the things that we've developed.

Speaker 2 (12:20):
So when I think of technology, I think of things.
When you say trading execution, the ability to get best execution,
but risk is a big challenge. How do you identify
how much risk is within a portfolio? And given that
your multi strat, how much do the does the risk
cancel each other out? How do you do that analysis

(12:41):
that seems like a moving target.

Speaker 3 (12:43):
That's really important. So first the overall philosophy, right, like
this is a slugging type of business. Right, So if
you if you contrasted with like high frequency trading, which
is a hit great type of business, right, you're going
to have ninety nine percent of your trades or whatever
it going to be offitable or a tiny loss, right right, tiny, tiny,

(13:03):
tiny and repeat repeat.

Speaker 2 (13:04):
Right.

Speaker 3 (13:05):
This is more of a slugging type of business. So
if we have pms and we have one hundred and
seventy investing teams at the moment, right when you hire
and so when you hire an investing team, chances are,
depending on their track record, maybe seventy five percent of
them will lind up working out. If they have a
lower track record, they're coming as like a former analysts

(13:27):
making a transition to the PM, maybe it'll be fifty
to fifty. Right, But if you can control the risk
you might lose you know, ten million, twenty million, thirty
million on somebody who doesn't work out kind of life
to date in their performance. But the ones that do
work out, you're increasing their capital, you're growing their team,
and they'll hopefully be with you for ten twenty plus

(13:49):
years and you might make you know, hundreds and hundreds
of millions off of them. Right, So how that plays
into risk, Right, In order to enable the slugging, you
have to have very well defined risk boxes within which
people will operate to enable them to bet on the
things that they're really good at betting on, and try

(14:10):
to exclude as much of other stuff as possible. So
for every strategy, we'll have you know, stops, we'll have
voll targets, vall limits, we'll have stress limits, liquidity limits,
et cetera. And you create this box that's completely transparent
and in partnership with the portfolio manager that you're hiring,

(14:32):
and customize it and iterate it, and then it has
their strategy evolves and there's new opportunities you're you know,
adding to it, subtracting from it all the time, et cetera.
But the idea is to create this this platform for
them within which they can create like a very steady growing,
you know, alpha stream that really placed to their individual strengths.

Speaker 2 (14:52):
You know, you mentioned market wizards at the beginning, and
I can't remember. I've read all of them over the years,
the first one a couple of times. I don't remember
which trader it was. But the thing that stayed with
me was it your win loss record is in what matters.
It's how much do you lose when you lose relative
to how much you're gaining when you win exactly, And

(15:14):
you could lose three quarters of the time if you're
losing a little bit. But the winners are big winners. Yeah,
net net that's a big win.

Speaker 3 (15:21):
Yeah. We find are it varies by strategies, but if
you think about equities. In equities, we find portfolio managers
who have hit rates in the fifties with decent slugging
could be very very good. Right. If somebody's got a
hit rate and the upper fifties with decent slugging, like
that's you know, that's an all star, or somebody could
be more like fifty to fifty, but they have very

(15:41):
good slugging. You know that that works it's hard to
find somebody with you know, twenty five percent hit rate
and enough slugging to kind of overcome that, because there's
just there's just.

Speaker 2 (15:50):
Too many reps, too much churn.

Speaker 3 (15:51):
But in some other strategies, if you have you know,
commodities for example, or a directional macro there you can
have like even a lower hit rate if they're very
good at sizing right, because they have a smaller number
of bets at any given time and they're trying to
find like a few larger, bigger.

Speaker 2 (16:08):
Trades pyramid, the winners ride the trends all the way out.
Really interesting. So you start the firm in two thousand
and one, really the beginning of a lost decade. We
didn't get back over prior highs in every asset class
pretty much till twenty thirteen. What was it like, launching
right into the teeth of that dot com collapse.

Speaker 3 (16:30):
It was a great trading environment, actually, so we did
very well at the time. We were running a lot
less capital. We started with forty million dollars, so, but
the markets were less efficient. We were predominantly equity long short.
There's a lot of dispersion. There was a lot of
things that were unwinding from the bubble. In both directions,

(16:50):
we were able to take advantage of that and really
grow the business.

Speaker 2 (16:53):
What was the biggest surprise to you in terms of
the direction the business grew and evolved.

Speaker 3 (17:00):
I would say in those years there wasn't anything particularly surprising.
In you know, two thousand and eight, we made people
a little bit of money, but we had fifty percent redemption,
so that was a bit surprising and not particularly pleasant.

Speaker 2 (17:17):
They people, just clients just panicked and said, I need look.

Speaker 3 (17:20):
At any liquid. It did because so we didn't. We
chose not to get people. We had the adoption in
our docks, but we decided we were liquid and we
actually went to cash and Q four OFA.

Speaker 2 (17:31):
Did that cash come flying back in nine?

Speaker 3 (17:34):
Yeah, it took a few years actually, but eventually, yes,
eventually we got some credit for that.

Speaker 2 (17:38):
But if you're positive in eight, what was eight down
thirty seven percent fifty or something? Oh, really, that's a win.
Anything in the green is a win.

Speaker 3 (17:46):
It's that was surprising, but outside of that, it wasn't
anything too crazy.

Speaker 2 (17:51):
Coming up, we continue our conversation with Dimitri Ballyosny discussing
what it was like building bally Osney Asset Management into
a powerhouse. I'm Barry Ridults. You're listening to Masters of
Business on Bloomberg Radio. I'm Barry Dults. You're listening to

(18:18):
Masters in Business on Bloomberg Radio. My extra special guest
this week is Dmitri Ballyasni. He is the founder of
Ballyasney Asset Management, running about twenty eight billion dollars in
various strategies, and currently your title is Chief Investment Officer.
How do you balance that role while simultaneously running a

(18:40):
firm of twenty three hundred employees.

Speaker 3 (18:42):
Well, I think number one, I have great partners and
great management teams, so that helps a lot. We have
twenty partners today and a lot of top senior managements
across all the departments. Besides that, I don't think there's
a tremendous amount of different difference in the hedge fund
business between being a c I own a CEO. It's
kind of really commingle type of function because what are

(19:05):
you doing as a CEO, Like, you're trying to figure
out where to make money in the hedge fund, right,
So that's basically how I spend my time. It's like
trying to optimize our investment strategies, and that really includes
pretty much everything you need to do from a business standpoint.
How do you get the best people, where do you

(19:25):
have edge, how do you build your competitive mode around
a strategy, how do you break in and wedge into
a new strategy, and then how do you grow it
from there? Again, that it's going to go down to
finding the best people and enabling them to execute in
that area. How do you support them with the best
infrastructure and technology. So you have to work with all

(19:46):
the departments to figure out how to do that.

Speaker 2 (19:49):
So the one thing that continues to surprise me doing
these interviews is how many people have said talent acquisition
is absolutely the single most important thing.

Speaker 3 (20:00):
Yeah, they do it.

Speaker 2 (20:01):
Sounds like you're in that campus.

Speaker 3 (20:02):
Definitely. It all start. It all starts with talent, right,
and the talent starts with why are they going to
come to you? Right? Like, how are you going to differentiate?
And that was always kind of the starting point from
twenty five years ago because even at that time, we were
competing with firms that were, you know, twenty five times
our size, right, and so how are you going to compete?

(20:22):
And you're not going to write the largest check for
somebody to show up, so you really got to compete
on enabling them to be the most successful over time. Right.
So that's you know, the insights, the collaboration across strategies,
the culture that you can foster, helping them build their teams,
helping them build the resources and infrastructure around them, coaching,

(20:45):
learning from other people's mistakes, you know, having a very
transparent environment. All these things that each individually might not
be that important, but when you add them all up,
it really makes the difference over the arc of somebody's
career and to.

Speaker 2 (20:58):
Put a little flesh on those bones. Ballyasny Asset Management
has won numerous awards in terms of best places to
work in money management, including taking the top award from
Pensions and Investments Best Places to Work. How much of
this is comp and how much of this is corporate

(21:19):
culture beyond just the dollars.

Speaker 3 (21:21):
I think comp is always part of it. Like, you
certainly have to be competitive and you want to run
a meritocracy. So the top people that are really driving
the performance of the fund on the business side and
the investing side should be super well compensated and have
partnership opportunities. But besides that, I think the culture can
lead to the performance.

Speaker 2 (21:42):
Right.

Speaker 3 (21:42):
The culture is not just it's a nice place and
people are nice to you, Like that's great. But if
you have like a culture that's really driven but at
the same time collaborative, right, and where people are collegial,
but they also push each other and they're also constantly
trying to figure out like better ways of doing things

(22:02):
and want to succeed themselves and be the best, but
also they want the person next to them to succeed
and make the firm better. Right, Like, if you can
create that type of culture like that really is one
that high performers are going to want to work in
and thrive at.

Speaker 2 (22:19):
Really really interesting. So so let's talk a little bit
about high performance. You operate a multi strategy platform. When
I hear multi strat I think fundamental equity, macro commodity, slash, futures, trading, arbitrage,
systematic quant.

Speaker 3 (22:38):
You got it?

Speaker 2 (22:38):
Am I missing any that.

Speaker 3 (22:40):
Those those are the major strategies. They all have lots
of subcomponents. So you know, we have an arbitrage business
for example, that will include you know, converts and credit
long short and merger arbitrage, and you know, a dozen
different strategies, right, and commodities will have folks that are
trading futures directionally, we'll have folks that are doing a

(23:03):
lot of our V type tradings. We'll have physical commodities
now that we're building out. So all these strategies have
lots of sub strategies associated with them, but generally that's
the right idea, and you're constantly trying to enable the
next set of strategies. Right, if you can execute well

(23:23):
in the ones that you're in this year, you have
the option to figure out how to expand them, which
might be more dollars in the stuff you're doing well.
But also what does that give you the right to compete?
And that's adjacent and we're always trying to kind of
figure out what is the next thing.

Speaker 2 (23:38):
Really interesting, there was an article I'm trying to remember
which publication I saw it in that claimed you hired
a trader with a fifty million dollar pay package from
a competitor. Is that remotely close to the sort of
pay packages and how much does a trader have to
generate in profits to qualify for a fifty million dollar package?

Speaker 3 (24:01):
Sure, so you have to remember that the size of
capital the folks are running these days has grown a lot.
And so what publications like to do to get people
to read the articles rights put in large dollars as
opposed to you know.

Speaker 2 (24:15):
Percentages, denominator blindness. They leave out, yeah, the context that
it just looks like a big round number.

Speaker 3 (24:21):
Yeah. So you have like these headlines all the time,
one on how much people get paid to how much
somebody made or lost. And you know, if you have
something that says, you know, trader x y Z lost,
you know, fifty million dollars, right, and that's like, wow,
that sounds like a giant number, but you have to
remember we're managing twenty eight billion, right.

Speaker 2 (24:38):
That's a normal draw down.

Speaker 3 (24:39):
Yeah, I mean a typical portfolio manager, right, might be
managing a couple of billion in gross market value. Right,
So you know that's two and a half percent, which
is not good, but it's not you know, it's not
a disaster, no, Like, that's kind of the fluctuation that
that that you're going to get, right, And so from
a hiring standpoint, it's the same thing if you're hiring
a trader with a fifty million dollar pay package for

(25:01):
example one, that pay package is composed of lots of
different things. It's not all it's not just you know,
here's fifty.

Speaker 2 (25:07):
Million for sure.

Speaker 3 (25:09):
Yeah, Like that includes you know, it might include a
guarantee for the time that the person is out of
the market. It might include a budget for hiring out
their team, right, that's a lot of these teams are
five to ten, in some cases fifteen people, so that's expensive.
And it also might include extra upside incentives which are
only paid out if the person delivers a certain amount

(25:31):
of P and L. So you know, they kind of
like print one number, but it's actually like lots of
different components. Usually with that type of number, you're budgeting
that person to generate P and L of one hundred
million plus a year. That we should have a track
record of doing that, and if and if you're right
on that, that leads to very healthy returns net to

(25:54):
our investor, which you know we've delivered over time.

Speaker 2 (25:56):
That's the game. You have over three hundred analysts and
one hundred and seventy pms. How many different teams do
you are you guys running one hundred and seventy pms?
Is that one hundred and seventy specific strategies, so.

Speaker 3 (26:10):
It's one hundred and seventy teams. So within the equity's business,
for example, you'll have like seventy teams, which sounds like
a lot, but you have to remember that that's split
across you know, three distinct equities businesses that all have
like a different front end. And it's also split across
offices all over the world. And folks are you know,
based in London, trading Europe, based in Hong Kong or

(26:33):
Singapore or Japan, you know, trading Asia. So it's still
fairly specialized. And each one of those teams will have
a mandate where this is the group of stocks that
they're focused on in the case of equities, or this
is the macro strategy and you know RV or emerging
markets or rates or directional that they're focused on in macro,
or this person focused on you know, trading gas or

(26:56):
trading power and commodities, and they'll build a team of
sub specialists analysts around that.

Speaker 2 (27:03):
Really interesting, so I mentioned earlier you've scaled up to
twenty eight billion dollars, Where does the general management strategy
and style begin to get altered just by the size
At what point does that. We've seen a number of
farms at one hundred and two hundred billion dollars and

(27:25):
just the sheer heft becomes challenging. You can't generate alpha
at that scale, or at least not the same alpha.
How large can this get comfortably?

Speaker 3 (27:37):
It's hard to say. I think that's a function of
how markets develop over time. So if you have more companies,
active capital markets, the world is growing, more places to
trade in, you know, more credit instruments, more equity instruments,
more macro instruments, then there's there's kind of more to do.
So if I think of the subset of strategies that

(27:59):
we trade today, a lot of these things weren't significant businesses,
you know, ten years ago or twenty years ago. So
a strategy like merger arbitrage has been around a long time.
A strategy like index rebalancing really got going the last
ten to fifteen years, right, you know, power trading in
the commodities markets, right, not a lot of people doing

(28:19):
that twenty years ago. So a lot of these things
go from very small strategies to much larger markets, you know,
over time, and that enables you to run more volved
there you know, increasing your capacity. The way that we
go about it is every year and we updated throughout
the year. We measure our capacity for you know, this

(28:42):
year in the following, and so we look at bottom
up by each team, like how much can they grow
at a steady pace. We don't want people to grow
too fast, and we don't want people to stay stagnant,
right Like, you want to find the healthy pace of
growth as you're expanding your coverage, as you're getting used
to running larger, dour amounts and dealing with those constraints.
And we look at the recruiting, so where can we

(29:03):
expand who is coming in? What does the pipeline kind
of look like? You know, we discount that because not
everyone's going to work out, But you add those numbers
together and that gives you a sense of what the
growth path is likely to be. And over time that's
averaged about twenty twenty five percent a year, you know,
capacity growth.

Speaker 2 (29:23):
So you mentioned you're looking both internally and externally at recruiting.
When you're looking internally, how do you identify and nurture talents?
How can you tell when, hey, this person started out
as a trader or a PM, but they really seem
to have skills and can manage a larger group. That
seems like a really challenging thing.

Speaker 3 (29:43):
We spend a lot of time on that, and I
think that's one of the keys to how we're going
to grow from here on out. Like recruiting is super important,
but being able to develop your talent. I think as
you have scale and you have more people to learn
learn from, right, that becomes a bigger and bigger slice

(30:03):
of your senior talent pool over time. So when we
started off for a long time, the vast majority of
our pms were recruited, you know, externally. Today, like an
equities business, which is the most mature of our strategies,
twenty five percent in the US are internally promoted, and
I wouldn't be surprised if that was fifty percent in

(30:25):
a few years, right, because now you have more senior
pms from up and coming analysts to learn from, more
programs that they can participate in to work their way
up if that's the path that they want to choose,
which you know that wasn't available. You didn't have the
mentorship and the tools. So how do you help people

(30:46):
and select It's both quantitative and qualitative so on the
quantitative side, we try to measure as much as we can.
So we have data on people's recommendations, not just on
the ultimate trades, but the data on their recommendations, and
you see what is the performance and we track that.

(31:08):
So you try to disaggregate the performance of the analyst
from the PM and see if who's driving value and
if it's a particular analyst is doing great, Like, we
want to make sure that person is getting more authority,
more autonomy, and more leeway over time, right, more growth opportunities,
and the best growth opportunity for them might be with
the team that they're on. They might become a more

(31:30):
senior analyst, they might become a partner on that portfolio,
or they might raise their hand at some point say
like hey, I want to be a PM, and we
want to make sure that we facilitate a path to that.
If we agree that they are talented and part of
that is in partnership with the PM that they're working for.
You don't want the person to just leave and go
somewhere else to take that opportunity. You want to make

(31:52):
sure that they replace themselves they work in partnership with
the PM, maybe they co run something for a period
of time and then they have the opportunity to do
their own thing. So it's definitely a combination of those.
And it's the same thing on the business side, like
you're always on the lookout for emerging business leaders who
can manage others, and we have a lot of leadership
development that we do and also utilizing external coaches as

(32:16):
well to help with that.

Speaker 2 (32:17):
That's really interesting external cultures. You mentioned mentorship. How important
is mentorship to the firm and how significant was it
in your own professional job.

Speaker 3 (32:28):
Well, that's where a partnership culture is really important, right.
So I think it's still fairly unusual in hedge funds,
especially in our type of fund, and we've always wanted
to build a true partnership where people own real equity
in the business, you know, they buy in with their
own money, they participate in all the economics of the business.

(32:49):
And we have partners who are coming from the business
side running a particular department. We have partners who are managers,
heads of strategies, investment site, and we have portfolio managers,
and so that dynamically creates like a culture where folks
are incentivized to make the firm better to make someone
else better, and they're obviously much more willing and excited

(33:13):
to be mentors in those situations. And I think when
you start with that, and I started with you know,
two my co founders, Scott and Taylor, you know, twenty
plus years ago, in a partnership type structure, and I
think that then flows down through the organization. And so
now today we have mentors for you know, interns coming up, right,

(33:36):
and you have mentors for you know, younger associates in
different areas of the firm, and then it goes you know,
all the way up and down the firm really really
so far myself Sorry didn't answer that question.

Speaker 2 (33:46):
No, but you did. Yeah, let's hear about your own mentorship.

Speaker 3 (33:49):
I mean, I certainly learned a lot from Stifo work
working with him at the time, and got really good
opportunities there. I think at a young age it was
more you know, certainly work at from my folks, uh,
And then it was a lot from sports, right. I
did a lot of you know, basketball and you know,
taekwondo and things like that and seeing kind of what

(34:12):
was possible, Like I remember as a kid like watching
taekwondo demonstration where our instructor Master Shim. It was like
a very slight Korean guy. It's probably I don't one
hundred and forty hundred and thirty pounds, and he punched
through a stack of seven cinder blocks, punched through and uh,

(34:34):
you know seeing that as a kid, you know, And
I went to like examine the bricks after he did that,
and like tried to punch it, and I was like,
wow that, you know, that hurt. And just seeing that
just kind of shows you kind of what's possible. Because
every day after practice you would see the guy sit
there punching a lead slab, you know, for you know,
I don't know, thirty minutes. Wow, right, and it just

(34:57):
adds up over time.

Speaker 2 (34:58):
Reminds me of the demonstration the so old I Am
Bruce Lee did with the one inch punch.

Speaker 3 (35:04):
Do you recall that I was just showing that to
my kids.

Speaker 2 (35:06):
Letter just an inch and he's also forty ways soaking wet,
one forty And it's amazing the focus and power that
you can create in such a small.

Speaker 3 (35:18):
That's exactly the thing. It's it's focus and perseverance, right.

Speaker 2 (35:22):
Really quite quite fascinating. So let's talk a little bit
about the current environment. I was kind of fascinated by
something you told your team, You guys are trading too
much and not investing enough unquote explain.

Speaker 3 (35:39):
I think one of the keys to enduring success in
the money management business is finding a balance between trading
and investing. And you have to be true to your
DNA and obviously the type of firm that you're at, right,

(36:00):
But within each type of firm and each type of strategy, uh,
there's always this you know tension, right, because you can't
survive in a hedge fund type model, you know, just
being a long term investor, and you can't really scale

(36:21):
in a significant growing hedge fund being just a superactive trader, right,
So you need some combination of the two. And so
what we try to do, both at the individual level
and at the strategy level, is help folks find that balance.
Part of it is just seeing what's working, and part
of it is a lot of statistical analysis that we

(36:42):
do on each of the each of the teams. So
when I made that comment, we were coming out of
a period where I noticed that folks are really trading
a little bit too much in the fundamental know equities
business and we're like a little bit overly focused on
each data point or we're kind of sing the forest
from the trees, right, and we were chopping ourselves up

(37:04):
a little bit too much, missing some of the bigger
winners and creating a lot of trading slippitch costs. So
we really worked hard with the teams to find more
balance with that, Like find some positions that you can
really be a longer term investor. Doesn't have to be
you know, years and years, but it could be you know,

(37:24):
months and quarters and supposed to days to weeks. And
find investments where there's multiple ways to win, where you're
not playing for one particular data point, you're playing for
a whole series of data points that's going to revalue
you know, that security over time, and that's been you know,
very very effective outside.

Speaker 2 (37:46):
So how much of this is a function of the
environment that we all find ourselves in in any given moment.
Twenty two was a double digit down year for stocks
and bonds, but it was followed by twenty three and
twenty four for both years back to back plus twenty
five percent at least for US equities. If you're shortening

(38:08):
up your investing timeline in a plus twenty five percent year.
Is it just as simple as hey, you're leaving too
much money on the table.

Speaker 3 (38:15):
But well, for us, it's a little bit different because
we're running pretty much market neutral and almost all the strategies.
So if you're running market neutral, whether the market's up
twenty five or down twenty five, like, you're always going
to have half your portfolio that's losing money on an
absolute basis, Yeah, but you're trying to make the spread right,
like you're trying to make the spread between your lungs

(38:36):
and your shorts right. So what influences are trading more
than the absolute direction of the market is the volatility
in the market. So if you're in a period that's
very high VALL, you're naturally going to be trading more
to manage your risk and also because you're getting stopped
on things or they're hitting your targets like fairly quickly,

(38:56):
and high VALL is associated with fundamental events changing.

Speaker 2 (39:00):
Very quickly twenty two or like the.

Speaker 3 (39:03):
Spring, so you've got to trade more exactly versus periods
where things are sort of slowly you know, trending, and
that's okay, but over the course of the year, right,
those periods are going to balance out. Some will be higherball,
soon be lower ball. You want to find like the
right amount of turnover to where you can capture your alpha,

(39:23):
capture those relative miss pricings and move on to the
next thing that generate a strong sharp combined with like
enough capacity. Right, you can have a very high sharp
and low capacity. That doesn't really help in a scale
you know, hedge fund, Right, you can't eat your sharp,
but you need enough sharp to be consistent putting up

(39:44):
a P and L. That kind of matters for the firm,
and that matters for the team that you're running. And
so for every strategy, like we try to come up with,
like what is a reasonable range, right, And it might
be higher for you know, a tech portfolio manager than
you know utility sport f manager, right, but each of
them should have a range that sort of is optimum

(40:07):
for their style, and we try to help them, you know,
find that.

Speaker 2 (40:10):
So with the benefit of hindsight, I'm looking back at
twenty twenty four, a fairly low vall year. Hey, maybe
we should be trading a little less and holding a
little longer. And then twenty twenty five fine spiked at
the end of Q one and into Q two. All Right,
you guys can chop it up a little more. Is
it just that simple or yes?

Speaker 3 (40:30):
But again I would say the more nuanced answer would be,
there's lots of different types of trades that each person does,
and you don't want any PM doesn't want their portfolio
to just be one type of trade, right, So you
might have short term trades, medium term trades, long term trades, right,
structural trades, tactical trades, risk mitigation trades, et cetera. There's

(40:54):
lots of different types of trades, and people run into
problems when they get two focused on one kind of thing, right,
and then when that thing is no longer working, it's
very hard to then reinvent yourself because you don't have
any other irons in the fire. So again, we're trying
to run a lot of analysis and find like, what

(41:16):
is the team really good at, make sure that's being
expressed in the portfolio, make sure there's enough balance of
different types of trades, and that they're not betting on
things that they don't really have views on that can
take them out of the game before the things they
do have views on.

Speaker 2 (41:31):
Payoffs coming up, we continue our conversation with Dimitri Ballyasny,
co founder of Ballyasney Asset Management, discussing the current market
environment for trading. I'm Barry Ridals. You're listening to Masters
in Business on Bloomberg Radio. I'm Barry Redults. You're listening

(42:03):
to Masters in Business on Bloomberg Radio, and some of
you are watching this on YouTube. My extra special guest
this week is Dmitri Ballyasni. He is the co founder
of bally Asny Asset Management, a multi strategy hedge fund
running over twenty eight billion dollars. Do the different teams
hedge their own positions or is that a function of

(42:26):
firmwide risk management and somebody else?

Speaker 3 (42:28):
We do both. So each team is responsible for running
within their risk parameters. So they'll have, you know, in
the case of the long short portfolio manager, they'll have
an IDIO risk right. How much of your risk is
outside of factor risk? Right? And that should be you know,
sixty seventy eighty percent of your risk, depending on the
portfolio and the style of the PM. But it's basically

(42:52):
the vast majority of somebody's risk is their stock picking
alpha right. Depending on their skill and things like picking
the right, industy tree or trading the directionality of the
market around, we might give them some more room or
less room, you know, to do that. If you're a
directional macro trader, you're going to have you're not going
to have that constraint because you're paid to directionally bet

(43:14):
on the market, right, But you're going to have other
limits like stress limits. Right. So if your directional bets
don't work out and there's a gap tomorrow, you know
how much are you going to lose in a stress scenario?
So you have to if that number is too high
versus the agreed upon risk limits, you have to do
something in your portfolio to hedge you know that that risk, right.

(43:36):
So it's a little bit different for each type of strategy,
but the common philosophy is you want to be able
to run it to maximize your return while staying in
the game right and delivering a relatively steady source of
alpha over time.

Speaker 2 (43:54):
It's interesting because they're called hedge funds, but many hedge
funds don't hedge, and it sounds like balle Asni really
makes an effort to make sure that as a risk
management approach, anything that's potentially downside as you said, a
gap has to be edged.

Speaker 3 (44:12):
Yeah, I mean you're looking for consistent absolute returns. So
how do you get that?

Speaker 2 (44:18):
Right?

Speaker 3 (44:18):
You need specialists who have an edge and a particular strategy,
and they need a portfolio construction or risk management approach
that maximizes that edge, maximizes the capacity of dollars they
can earn off of those advantages that they have, and
minimizing the things that can create large draw downs that

(44:41):
they don't really have edge and betting on. And so
that's the analysis that you're constantly running and iterating on
with the teams.

Speaker 2 (44:48):
So I heard a fund manager say, we have no
competition because none of us in our space have market share.
For the most part, we're all less than one percent
market chair, how do you look at the competitive environment
for other multistrat firms. It seems like animal up and
you get a decent number. But there are what are

(45:10):
there eleven thousand hedge funds?

Speaker 3 (45:12):
Yeah. The way we think about it is we're not
really competing with eleven thousand hedge funds. So I think
what you've seen over the last you know, twenty plus
years is a consistent market share gain from the larger
platform firms, Right, and now I think there's really like
four or five, right, And if you look at the

(45:35):
private equity industry, it's pretty similar, Like there's probably more
than ten thousand private equity funds, but the vast majority
of dollars, best majority of alpha, vast majority of people
are really.

Speaker 2 (45:46):
At half a dozen fat head, long tail.

Speaker 3 (45:49):
Yeah, so hedge fund industry has really had it in
that same you know direction. So we really compete with
you know, half a dozen firms. And now there's also
competition from some of the high frequency firms that are
kind of going upstream to some of the longer duration
discretionary strategies, and you know, we're doing more quantitative stuff
going the other way. Right, So maybe there's a couple more,

(46:12):
but you're really competing with half a dozen to a
dozen firms that are running you know, specialist strategies at scale,
and then everyone else in those strategies you kind of
look at as like a generalist, you know, participant, and
it's great to have general's participation. We want as much
as possible from you know, retail, from other funds, from
you know, prop from banks. The more liquidity of there is,

(46:34):
the more generous participation there is. You know, I think
the better for specialized firms.

Speaker 2 (46:39):
So the current environment kind of hard to compare to
any other era. On the one hand, we had a
fairly robust economy coming into twenty twenty five following a
whole bunch of FED hikes. Now we're expected to resume
FED cutting. By the time the sares, we're probably twenty
five paces points lower than today the whole tariff start stop.

(47:03):
And now back to the litigation the Supreme Court agreed
to take to that, it looks like inflation is starting
to percolate a little bit as the labor market seems
to soften. How does the firm look at all of
these macro crosscurrents. Are they significant or are they just
background noise or somewhere in between.

Speaker 3 (47:23):
Well, I would just say it's a really interesting fluid environment,
particularly for macro and long short equities, because there's just
so much change. So if you think about, like, what
is the worst environment to be in, it's not when
everything is clear, because when everything is clear, there's like

(47:43):
no volatility, there's no change. It's hard to get any dispersion.
So that environment might be good for passive strategies.

Speaker 2 (47:50):
But not good sideways markets.

Speaker 3 (47:52):
Yeah. Yeah, So now there's a ton of money slashing
around trying to figure things out, and that's that's a
great environment.

Speaker 2 (48:01):
Right.

Speaker 3 (48:02):
So if you think about this year on the macro perspective, right,
you went from a very you know, positive view in
January of how everything was going to play out to
you know, kind of the tariff mess and very pessimistic
view of how you know the US was going to
play out and what was going to happen with markets.
We're down twenty percent in SMP briefly and now you're

(48:24):
you know, right back up and still like a lot
of things kind of swirling around as to how it's
going to play out. To your point on rates and inflation,
has been a lot of change. It's create a lot
of relative value opportunities as you get different hiking cycles,
different cutting cycles in different markets. Like that's great for macro.
In equity land, you have all the changes not just
from the economy but from AI and how that's impacting

(48:48):
tech but also impacting companies that are customers or going
to be run over because of AI. Like creates great
long short opportunities. So I think it's a really fascinating market.
I don't have any giant you know, prediction of how
things are going to you know, play out tomorrow. But
if you have strong teams who are on top of
the latest data points and you can figure it out

(49:11):
a little bit ahead of the next person, just tremendous
opportunities like this last week, Oracle report a quarter.

Speaker 2 (49:17):
You know, crazy right for for a giant company company amazing.

Speaker 3 (49:22):
I mean it was last time you know a company
like that moved thirty five thirty something?

Speaker 2 (49:27):
Right? Dot Com collapse in direction.

Speaker 3 (49:30):
Yeah, I mean I'm amazing, right, So if you can
figure that out, or you know, I think of some
of these, you know, fintech company Circle went public, right,
Usually public offerings are like pretty efficiently priced. You know,
this one goes up four hundred percent after it starts trading, right,
and then it goes down fifty percent, you know, and
a month after that, so in the first three months,
I think of the travel in the stock. So amazing opportunities,

(49:52):
right if if your teams can figure that out. So
you know, we're out there working hard doing the research
and you know, figuring out the market.

Speaker 2 (49:59):
So it doesn't sound like you think the AI theme
is overdone, but it certainly is. Creating a little more
volatility and a little more opportunities.

Speaker 3 (50:08):
Yeah, I think the reality when we look back, you know,
in ten years or in twenty years, in the actual
outcomes that have happened, it's probably under hyped. In terms
of the stock rate of the stock prices across the board,
Like that's harder to say, Like, there's some that are

(50:29):
probably way overhyped, there's some that are probably under A
lot of companies have moved from one bucket to another
where they were in a loser bucket and actually they
turns out maybe they're a winner or vice versa, where
people got too optimistic and maybe they don't really have
anything that's defensible and differentiated. So I think there's a
lot of alpha to be gained in figuring that out.

(50:50):
And it's hard to find things that are, you know,
super bargain priced that have anything to do with AI.
But in terms of like the longer term potential to
really transform how people work and how companies work, I
think it's probably under hyped.

Speaker 2 (51:04):
I've been fond of thinking of this in terms of, Hey,
the Magnificent seven certainly have been overhyped, but the Magnificent
four ninety three people haven't really been paying attention.

Speaker 3 (51:17):
Yeah, I mean it's a good question, like have they
been overhype? Right? If you look at the dollars in
earnings and cash flow that they're generating, impressive, the market
caps that they're growing, like, I think they're you know,
executing amazingly, amazingly well, I think it's quite different from
what we had in the in the dot com era,
where companies weren't really making making money. So that's one difference.

(51:40):
The other four in ninety three, I think there's a
lot of you know, headwinds and tailwinds. So some companies
are going to figure it out, right, and they're going
to kind of make the leap into the future and
figure out how to be much more efficient. And you're
starting to see that in some of the commentary on
the earnings calls where margins and positively for you know,

(52:02):
the way that they figured out how to leverage the
tech and others are going to disappear, right, So I
think it's going to create a lot of opportunities.

Speaker 2 (52:10):
So the trader in May sees recording this on the fifteenth,
another set of all time highs. I always learned on
the desk all time highs or bullish. What's your perspective
on all time highs?

Speaker 3 (52:23):
Yeah, I think like you have this two tiered market
that you mentioned, where you have the kind of tech
leaders and AI leaders and everything else, everything else. Companies
definitely got hurt more with all the tariff ups and
downs and inflation ups and downs earlier this year. That

(52:43):
seems to be certainly calming down and the partially you know,
top down is calming down and partially bottom up companies
are figuring out, you know, how to navigate these things
and maybe it's not as troublesome as they thought. And
so you're seeing like better execution and probably a little

(53:05):
bit more uh positivity from companies than you were seeing,
you know, certainly six months ago, and that's starting to
get reflected and the market's broadening out a little bit.
But you know, the largest you know, tech companies certainly
have you know, tremendous advantages that they're continuing to press.

Speaker 2 (53:24):
So last of our regular questions, what are traders and
investors not thinking about? We're talking about, but perhaps should
be what topics, assets, geography, policy, data points, what's getting
overlooked but shouldn't.

Speaker 3 (53:39):
I think it's I don't know if it's getting overlooked,
but I would say, when you think about AI, where
it's going, what are the ramifications for every type of company? Right? So,
at the moment, while AI is making us much more
productive and efficient, we haven't lego of one person because

(54:01):
AI has automated their job, right, Like we're just hiring
more AI people, right, But if you look out, you know,
five years from now, is that's still going to be
the case? You know, probably not right, Like some jobs
are going to get automated, right, and you know we're
kind of on the you know, high end. I would
say of you know, skills that are necessary to work
at a leading hedge fund. If you think of like

(54:21):
a typical company where there's a lot of folks doing
like very bureaucratic type of things, like a lot of
pretty mundane tasks, Like all that stuff is going to
be automated. I don't know if it's in a year
and five years like, but somewhere in that timeframe, it's
going to be automated.

Speaker 2 (54:36):
When you think about that, with the entry level jobs, yeah,
under thirty unemployment is like nine point nine percent double
regular employment.

Speaker 3 (54:44):
Yeah exactly. And so as you think about that, Like
what does that mean for every type of company? Right?
If if you're a company that can really harness that
and you could produce your products your services at a
much lower price point and you figure out how to
the competition, like your margins might explode to the upside.
On the other hand, if everybody in your space is
doing that, like maybe your margins are actually going to collapse,

(55:07):
right because everybody's going to drive down pricing. And how
does it flow downstream? Like do you need as much
office space if you're going to have less people in
a particular area? Right, So, like all these kind of things,
I think everyone is focused because there is a lot
of volatility. Everyone is focused very much on like the
next quarter. But if you think out, you know, two, three,
four years, like how's this space going to look?

Speaker 2 (55:28):
Right?

Speaker 3 (55:28):
And that's kind of the balance of trading and investing
the work. You know, you got to have one eye
on each.

Speaker 2 (55:33):
And before I get to my favorite questions that I
ask all of my guests, I have to ask you
about some of the philanthropy you participate in. Tell us
a little bit about the Atlas Fellowship and some of
the other things that you've been doing. Over the past.

Speaker 3 (55:49):
Sure. So this was a program that my wife, Rebcka
and I started I think this is five years ago now.
We were looking to start an initiative to help kids
go to college who were a bit under resource, maybe
first in their family to go to college, et cetera.
And as we're looking at these scholarship opportunities, particularly in finance,

(56:12):
we couldn't find any program that had a combination of
internships with scholarships. There were some that had ones that
were captive to a particular company, but then you were
beholden to work just at that company forever. But there
wasn't anything that was diverse right where someone could get
real exposure across the industry. And so that's what we

(56:33):
started with with Aplos Fellows, where we give kids who
were super bright driven merit based scholarships.

Speaker 2 (56:42):
Right.

Speaker 3 (56:42):
So these are the top students in the class, a
lot of times from diverse backgrounds, from with no connections
to finance, right, and they get scholarships of up to
twenty grand a year for four years. And in addition
to that, they get fully paid internships at finance firms
for all four years.

Speaker 2 (57:00):
Not your sure firm, but exactly bad variety exactly.

Speaker 3 (57:03):
So we take them their first internship when they're coming
out of high school, and that one is typically done
at BAM, and they work either on investing teams, our
data teams, our tech teams, our business teams. And then
the next year they go to work at a bank,
or they go to work at another hedge fund, or
they go to work at a PROP firm or a
VC firm, and every year they rotate. And we just

(57:23):
had the first cohort graduate last year. They all got
jobs in finance, some in Chicago, some of New York,
and employers are really competing over the kids. Like they're
super smart, driven, passionate kids, and now they've had four
years of finance internships at top firms. So I think
it's working really well and we're working to scale it up.

Speaker 2 (57:44):
They become a hot commodity.

Speaker 3 (57:46):
Yeah, exactly, And just like the fun like, now we
got one hundred kids in the program and we're trying
to really scale it up to hundreds.

Speaker 2 (57:51):
Wow, that's great. All right, So let's jump to our
favorite questions that we ask all of our guests. Starting
with we talked about mentorship at a Let's talk about
who were your mentors who shaped your career. You mentioned
Steve Schoenfeld, he had to be significant. Tell us about
him and anybody else that made a difference.

Speaker 1 (58:11):
Yeah.

Speaker 3 (58:11):
I think what Steven did really well at the time
of the firm was it was a super entrepreneurial type
of environment. Everyone was kind of in business, running your
own little business, right, and most folks kind of stayed
as one man shops, right, as a one man trading unit, right.

(58:33):
But I had the opportunity to kind of build that
into a unit of you know, five and then ten
and then twenty and then thirty and then you know,
then we spun off. So just the freedom and support
you know to do that was really helpful, right. And
then a lot of business learnings from you know, seeing

(58:54):
how he allocated to different people, seeing how they managed
risk like that was very you know, very helpful. And
then philosophically, I would say the biggest impact was reading
Apples Shrugged in college, which I read in an English
class in college, and that really kind of articulated a moral,
you know, philosophical uh framework around which I think, uh,

(59:17):
it makes it much easier to build a successful.

Speaker 2 (59:20):
Business, right, Hence the name Atlas.

Speaker 3 (59:23):
Yeah, exactly the name of our fund and the name
of uh, you know, our our scholarship program. I think
a lot of times people have all sorts of conflicts
with you know, being successful, uh and at the same time,
you know, being a good person and helping the world.
And I don't actually think there's any conflicts. And that
objective is philosophy, and her work like really does a

(59:45):
good job of laying that scaffolding for people, uh, And
I think it makes it, you know, much more fulfilling
and less conflicted to also be uh, be successful in
all realms.

Speaker 2 (59:59):
So, since you mentioned Atlas Shrug, let's talk about books.
What are some of your favorites? What are you reading
right now?

Speaker 3 (01:00:05):
Yeah, that's definitely the number one. Uh. The current one
that's on my bookshelf is a fun one. It's from
this explorer. I didn't know there were explorers anymore, but
there are apparently. And we had this guy, Mike Horn
at our VC conference we do like a public private
VC conference every year called Elevate, and we had him
as a guest speaker, and we had two guest speakers

(01:00:28):
this year. We had Steve Kerr, the coach of the Warriors,
and we had Mike Horn Steve went first, and he
was amazing and a great you know stories on teamwork
and and uh collaboration and work ethic and Michael Jordan's
stories and stuff, Curry story, so it's great. And then
Mike had to follow him, and I was like, oh
my god, how is this guy gonna follow us? And uh,
my partner, Scott brought him, brought him on. And Scott's

(01:00:51):
great at finding like talent that's you know, other folks
haven't discovered yet. And this guy, uh, you know, has
circumvented the equator, so several times around the world, you know,
self powered walking, et cetera. He's gone to North Pole,
South Pole, swam the Amazon, like all these you know,
insane stories, one after another. And he's he's got a

(01:01:14):
book called I think it's called Nothing Is Impossible or
something along those lines. And you started, like, you shake
hands with this guy and he's not like a particularly
big guy, but you like crushed my hand. I go, Mike,
how do you get any sixty years old the way?
How do you get this handshake? And he's like, well, I,
you know, kite surfed across the Antarctica and that involves
you know, holding a kite across you know, frozen Antarctica

(01:01:38):
for fourteen hours a day. Is this huge wind is
pulling you along, and it's like, okay, that's that's how
you get that's how you get some grip string. But
he had like these amazing survival stories and just mental
fortitude stories that I think really relate to trading and investing.
So he was an awesome speaker, and so I just
got his book.

Speaker 2 (01:01:59):
Have you ever read Endurance the Shackleton?

Speaker 3 (01:02:01):
Yes, yes, I read it, watched the movie. That one
was hard to sit through.

Speaker 2 (01:02:05):
The book is just like it couldn't be fiction because
nothing is believed. It's so amazing it how to be real.

Speaker 3 (01:02:12):
Yeah, this is along those lines, but less abusive and
more fun.

Speaker 2 (01:02:16):
Let's talk about streaming anything interesting that you're watching or
listening to these days.

Speaker 3 (01:02:22):
I mean shows I like, I really enjoyed The Three
Body Problem those on Netflix. That was a fun one
of them.

Speaker 2 (01:02:27):
The book slog.

Speaker 3 (01:02:28):
I read the book actually afterwards, so.

Speaker 2 (01:02:31):
It's a little challenging. It's originally Chinese and transit, but
the show is it was really good.

Speaker 3 (01:02:37):
And in the books, the books like the Creativity and
the books are really fun, so that was a good one,
you know, Yellowstone. It's great usual ones there I'm listening to.
I think podcasts are like the greatest invention in the
last you know, five ten years of of not that
they weren't around before, but like popularized in terms of
being able to just expand your your knowledge set in

(01:02:59):
a very efficient way. So I try to listen to
as many as I can. I listened to, you know,
a lot of yours. I listened to a lot of
Tim Ferriss's. He's got all sorts of super interesting people
on there that invest like the best ones. There's a
ton on there. So there's a lot of finance ones.
There's a lot of VC ones I enjoy. I was
just listening to one they had vinode Cosla and then

(01:03:19):
another one with Mark and Dreesen. They're just like super
thought provoking. And so I encourage like all our young
people coming up that ask just you know, you have
this like amazing resource you could tap you know, Spotify
and and you got, you know, a thousand different podcasts
from world's best people in every field that you can
listen to sharing their insights.

Speaker 2 (01:03:37):
Well, there's no excuse to be bored these days.

Speaker 3 (01:03:39):
No it's amazing. I remember when I was coming up
and I wanted to hear like how do hedge funds
make money? Right? Like you couldn't figure that out? Like
if you had no connectivity to edge fund Like, how
are you going to figure that out? You read Market
Wizards and Malway, right, But besides besides that, reading all
the books they're available now, like the podcast, like amazing resource.

Speaker 2 (01:03:58):
Absolutely Our final two questions, what sort of advice would
you give to a recent college grad interest in the
career and either trading, investing multi strat hedge funds.

Speaker 3 (01:04:09):
I mean one is just follow your curiosity, which hopefully
leads to a passion of something that you want to
really do. Right, don't go into finance, hedge funds, whatever
it is, because your your friend is making a lot
of money, right, Like, you got to be interested in
the work, Like you got to be driven and curious

(01:04:31):
and hopefully passionate about what it is that you're doing,
because you know it's like pro sports or anything else. Like,
just because you know Lebron makes a lot of money,
doesn't mean you're going to go make a lot of
money play basketball, right, you know one, you know he's
six eleven. But besides that, like he's put in a
lot of work over the years, right, and it's because

(01:04:52):
he loves the game of basketball.

Speaker 2 (01:04:54):
Right.

Speaker 3 (01:04:54):
If you don't love it, you're not going to put
in the work and and trading for sure, if you're
if you don't love the process, and you don't love
sitting there looking at the screen and trying to figure
things out, you're not going to survive the emotional ups
and downs, because there's lots of downs in addition to
the ups when things work out. So that's the first thing.
The second thing I would say is go to a

(01:05:14):
firm that's growing right, and where there's a culture where
you can learn from others, right, where you can get
good mentorship. There's top people you can learn from, and
you'll have some amount of access to be able to
do that. The particular thing that they're trading or investing
or how they're doing it, like that's a lot less

(01:05:36):
important because you might change, the company might change. And
then the third thing is like, once you're in a
seat that's a decent seat, you know, ask for feedback,
like here's what I did, Here's what I think I
could have done. You know, what do you think right,
don't ask for feedback when the market opens or the
person's like in the middle of a you know, disaster's day.

(01:05:56):
But when things are quiet right early, late, right lunch hour,
like you know, get get feedback proactively, right, don't sit
around waiting for your year end review to see how
things are going. And you know, iterated together with you
know the people that you're working with.

Speaker 2 (01:06:13):
And our final question, what do you know about the
world of capital markets? Training investing today would have been
useful in nineteen ninety four when you were first starting out.

Speaker 3 (01:06:23):
I think the things that we've been doing the last
you know, five years, I wish I had figured those
out earlier. So investing more aggressively across strategies, right, I
think we were too equity heavy for too long. We
weren't serious enough about how do you build those strategies

(01:06:47):
outside of equities, and not serious enough about hiring top
people to manage those areas and then building like all
the tech and the infrastructure that you needed to really
be competitive and leading in those areas. So I wish
I would have figured that out a little bit a
little bit earlier and pushed at it harder. But I

(01:07:10):
think it's on the right trajectory.

Speaker 2 (01:07:12):
Now, Dimitri, thank you for being so generous with your time.
This has been absolutely fascinating. We have been speaking with
Dimitri Ballyasny, co founder of bally Asney Asset Management. If
you enjoy this conversation, well check out any of the
five hundred and fifty we've done over the past eleven years.

(01:07:32):
You can find those at iTunes, Spotify, Bloomberg here on
YouTube as well. Check them out. They're really a great
collection of resources. And be sure to check out my
new book How Not to Invest The ideas, numbers and
behavior that destroy Wealth and How to Avoid Them at
your favorite bookstore. I would be remiss if I know.

(01:07:56):
I think the crack team that helps us put these
conversations together each week. Alexis Noriega and Anna Luke are
my producers. Sage Bauman is the head of podcasts here
at Bloomberg. Sean Russo is my researcher. I'm Barry Ritolts.
You've been listening to Masters in Business on Bloomberg Radio.